Biofuels

What role could green crude play in the United States' energy future? During today's OnPoint, Cynthia Warner, CEO of Sapphire Energy, discusses her company's attempts to bring green crude to commercial scale. She also talks about the public acceptance and water usage challenges that exist with this technology.

Transcript

Monica Trauzzi: CJ, you're in town for the Advanced Biofuels Leadership Conference, making the pitch for bringing green crude to commercial scale. Talk a bit about what green crude is exactly and how it plays into the fuel conversation here in the United States.

Cynthia Warner: Yeah. The great thing is, it's just like any other crude oil. And in fact, it was made the same way, from algae. But regular crude oil or conventional crude was made millions of years ago, whereas green crude is made today from algae through a new process that Sapphire Energy has developed.

Monica Trauzzi: So there have been some concerns about water usage overall when it comes to algae-based biofuels. How are you overcoming some of those challenges?

Cynthia Warner: Well, we only grow the algae in salty water, so we - in fact, our whole process is designed to be completely sustainable, so we'll only use salty water, arid land, so that it's not competing with food or precious resources, such as fresh water.

Monica Trauzzi: And how would you say you're different from other algae-based biofuels companies?

Cynthia Warner: Well, we've developed the full value chain. In other words, we do the advanced biotech which is necessary to develop the algae strain. We do the cultivation system, which makes it look like a farm. We do the harvest system and the extraction system, which actually converts all of the biomass to a crude oil, which can then be refined in today's refineries, so we don't have to build any new infrastructure in order to use it.

Monica Trauzzi: So you've just launched a partnership with Tesoro Refining. Talk about how you're going to be engaging them, and what role they'll be playing in bringing this to commercial scale.

Cynthia Warner: So Tesoro is really our first customer, and they are refining our oil in one of their conventional refineries, without having to do anything differently. And what they'll be doing is taking our early stage crude and actually giving us the data so that we can learn how to optimize the crude production.

Monica Trauzzi: So what's your vision of the usage of this crude? I mean, once it becomes commercial, who is going to use it? Where does it go?

Cynthia Warner: Yeah. This is fantastic, because it's a domestically sourced, sustainably produced crude oil which can be used like any other crude. So it's basically giving us additional supplies in a sustainable way. It can be used in America or in any other country. So it's basically a way to make enough for everyone in an economical and environmentally sustainable way.

Monica Trauzzi: Are you concerned about public acceptance? I mean, how big of a factor is acceptance and education playing into your business model?

Cynthia Warner: Right. So far, as far as we can see, people love this technology. It's not detrimental to the environment. It's creating a new source of farming. It creates vitality to areas which otherwise don't have other sources of economic growth.

Monica Trauzzi: Can you give us some numbers in terms of what your production goals are?

Cynthia Warner: Well, even today, we're producing over 80 gallons a day of crude oil, and by next year, we'll be producing 100 barrels per day. By 2018, 10,000 barrels per day.

Monica Trauzzi: You're now eligible for a tax credit under the fiscal cliff law that was signed earlier this year. Has that changed the game for you?

Cynthia Warner: You know, what's really great about that is it gives confidence in our investors that this is going to be a technology that they don't have to worry about the risk. So our economic goals don't take that into account, but it helps us to de-risk what the commercial goals will be for our investors. So it's fantastic for us, because it brings money in when we need it in order to complete our development.

Monica Trauzzi: And are you seeking additional support from the government?

Cynthia Warner: Well, the government has helped us quite substantially with our IABR, which is the algae farm that we're growing right now. And additional grants would be completely welcome, but again, our economics actually are developed so that we're not dependent on government sources.

Monica Trauzzi: So you have the partnership with Tesoro. What future partnerships are you looking toward?

Cynthia Warner: Well, any off-takers such as airlines and other high fuel users are partners that we're talking to, and we're also working very closely with partners who are going to help us with our engineering to get to full scale.

Monica Trauzzi: Talk about fuel quality. How does this fuel compare to our traditional fuels in terms of quality?

Cynthia Warner: The great thing is that the fuel that's made from green crude is indistinguishable from today's fuels. Now the crude oil itself is actually higher quality than conventional crude. It doesn't need to be as refined as today's crude. It doesn't have the real heavy aromatics, and it doesn't have very much sulfur.

Monica Trauzzi: All right. We'll end it here. Some interesting ideas. Thank you for coming on the show.

Cynthia Warner: Thanks for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.